Snowflake SNOW reported non-GAAP earnings for the fourth quarter of fiscal 2022 of 12 cents per share, beating Zacks’ consensus estimate of 3 cents. The company had reported a loss of 22 cents in the prior year quarter. These figures are adjusted for non-recurring items.
Revenue of $383.8 million topped the consensus mark of 3.20% and jumped 117% year-over-year.
In the quarter under review, Snowflake’s revenue was positively impacted by the holiday season and platform enhancements, which helped the company attract new customers.
Shares of Snowflake have fallen 11.3% year-to-date, compared to a 29.6% decline in internet software industry Zacks. Meanwhile, the computer and technology sector fell 14.2%.
Snowflake Inc. Price, Consensus and EPS Surprise
Snowflake Inc. price-consensus-eps-surprise-chart | Quote from Snowflake Inc.
Quarter details
Snowflake’s product revenue contributed 94% of total revenue. The figure was $360 million in the quarter under review, up 102% year-over-year.
Product revenue growth was supported by several Snowflake product developments, such as the Snowpark, which helps data scientists and developers transform and program data.
Another contributing factor was Snowflake’s data sharing business, which saw continued traction, with Snowflake Marketplace listings growing 195% to over 1,100 listings from over 230 vendors.
Professional services and other revenue contributed 6% of total revenue. The figure was $24.2 million, up 98.7% year over year.
In the fourth quarter, financial services, retail, advertising and media, healthcare and technology accounted for 85% of net new bookings. During the reported quarter, Snowflake closed seven new deals worth $30 million or more, compared to just one in the prior year quarter.
During the fourth fiscal quarter, the company achieved a net revenue retention rate of 178% for existing customers. During the reported quarter, the total number of customers increased by 44% year-over-year and the number of customers with revenues over $1 million reached 184, showing a growth of 139% from one year to the next.
Non-GAAP gross margin increased 400 basis points (bps) year over year to 71% from 67.1% in the prior year quarter.
Research and development expenses, as a percentage of revenues, decreased by 560 basis points on an annual basis to settle at 16%. General and administrative expenses, as a percentage of revenue, were 11%, down 550 basis points year-over-year. Sales and marketing expenses, as a percentage of revenue, rose to 40% from 53.3% in the prior year quarter.
Total operating expenses, as a percentage of revenue, were 66%, compared to 91% in the prior year quarter.
The massive increase in revenue year-over-year and the decrease in operating expenses as a percentage of revenue positively impacted Snowflakes’ operating profit.
Operating profit was $18.1 million in the reported quarter compared to an operating loss of $46 million in the prior year quarter.
Balance sheet and cash flow
As of January 31, 2022, Snowflake had cash, cash equivalents and short-term investments of $5.1 billion.
Adjusted free cash flow was $102.1 million as of January 31, 2022.
Advice
For the first quarter of fiscal 2023, Snowflake expects product revenue of between $383 million and $388 million.
For fiscal 2023, Snowfall forecasts product revenue in the range of $1.880 billion to $1.900 billion, suggesting annual growth of 65-67%.
Non-GAAP gross margin is expected to be 74.5% and non-GAAP operating margin is expected to be 1%.
Non-GAAP adjusted free cash flow is expected to be 15% in fiscal 2023.
Zacks Ranking and Stocks to Consider
Snowflake currently has a Zacks rank of #3 (Hold).
Some higher ranked stocks to consider in the same sector are Broadcom AVGO, Asana ASAN and Allied Movement Technologies AMOT.
Broadcom, Allied Motion Technologies, and Asana carry the Zacks No. 2 (buy) ranking. You can see the full list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Broadcom shares have returned 32.1% over the past year.
Broadcom is expected to report its first quarter 2022 results on March 3.
Shares of Asana have jumped 73.7% over the past year.
Asana is expected to report its fourth quarter 2022 results on March 9.
Shares of Allied Motion Technologies have appreciated 15.5% over the past year.
AMOT is expected to release its fourth quarter 2021 results on March 9.
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